Fixed
Income
3
34
STRUCTURE ORGANISATION AND OPERATION
OF THE SPANISH SECURITIES MARKET
A. Corporate debt. AIAF. SEND
platform
Spain’s AIAF fixed income market has become a
solid reference in the financial industry and one of the
main sources of financing the private sector economy.
In order to enhance its mission of channelling funds to
the private sector and efficiently meet the market’s real
needs, the governing body of the AIAF, with the partici-
pation of all players, has been producing a wide range
of initiatives and defining a model with the capacity to
be used in other countries. Its condition as an official
and organised market makes it different to most other
European countries which do not have an official spe-
cific market for private fixed income.
MARKET FEATURES
AIAF is the official market for private fixed income
securities. Members of it operate in the market, whether
for their own account or for the account of their clients.
It is part of Bolsas y MercadosEspañoles (BME).
Its main defining features is that it is a secondary,
official, organised, regulated and decentralised fixed in-
come securities market.
SECONDARY MARKET
AIAF is a secondary market that trades fixed inco-
me securities such as commercial paper, bonds, deben-
tures, mortgage-backed bonds, securitisation bonds,
preference shares, etc., which have been previously
put into circulation by the issuer in the primary market
and quoted on it.
It has three main functions: to provide liquidity
to issued securities, thereby facilitating investment in
them as they can be sold without having to wait until
redemption; setting the price of securities on the secon-
dary market (a process known as price formation); and
helping to cut transaction costs, i.e. the costs of finding
a buyer or seller and the costs of obtaining information
on the value at which it set a security’s price.
As a secondary market it is closely linked to the
primary market, i.e. with the moment when securities
that will subsequently be admitted for trading on AIAF
are issued and subscribed. Theoretically, the primary
market is very different to the secondary one; the for-
mer covers the issue and subscription of securities and,
once they are in circulation, the secondary market
takes over after they are quoted on AIAF. In practice,
however, this difference is not always so clear for fixed
income issues. Sometimes, securities begin to be tra-
ded just before their disbursement and this produces
an interconnection between the issue processes, on
the primary market, and redistribution/trading on the
secondary market.
DECENTRALISED MARKET
In general, the trading and contracting of fixed in-
come securities admitted for listing on AIAF does not
take place at a specific physical location or with the
use of a single pricing system. Instead, market mem-
bers trade from their own trading desks using an open
and flexible system for the dissemination of prices and
trading, which takes place mainly by telephone (Article
28 of AIAF Mercado de RentaFija regulations). This is
why it is called a decentralised market, which makes it
highly flexible.
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